Kitty Company provided the following information for the year ended December

31, 2013:

Retained earnings – unappropriated, January 1 200,000

Overdepreciation of 2012 due to prior period error 100,000

Net income for 2013 1,300,000

Retained earnings appropriated for treasury shares (original

balance is P500,000. It is reduced by P200,000 by reason of
reissuance of the treasury shares) 300,000

Retained earnings appropriated for contingencies

(beginning balance, P700,000. It is increased by current
appropriation of P100,000) 800,000

Cash dividends paid to shareholders 500,000

Change in accounting policy from FIFO to weighted average

method – credit adjustment 150,000

What amount should be reported as unappropriated retained earnings on

December 31, 2013?
1,150,0001,750,000
1,350,000
1,950,000

MM Corporation has 20,000 ordinary shares of Paper Corporation purchased in

2016 for P180,000. At the time of acquisition, MM designated the equity security
investment at fair value to profit or loss. On December 31, 2016, MM declared
the equity security investment in MM Company as dividend. The property
dividend was distributed on January 15, 2017. On the declaration date, the
aggregate value of the Paper shares held by MM was P300,000. The entry to
record the dividend would include a debit to Accumulated Profits and Losses of
None
P180,000
P300,000
P120,000
On January 1, 20Y2, Ninra Company entered into an 8-year lease of a floor of
building with useful life of 15 years with the following terms:

Annual rental for the first three years payable at the end of each 300,000
year
Annual rental for the next five years payable at the end of each 400,000
year
Implicit interest rate 10%
PV of an ordinary annuity of 1 at 10% for three periods 2.49
PV of an ordinary annuity of 1 at 10% for five periods 3.79
PV of 1 at 10% for three periods 0.75

What amount should be reported as lease liability on December 31, 20Y5?

1,614,604
1,366,064
1,214,604
1,266,064

4. Which of the following is classified as investment property?

Property that is being constructed or developed for future use as investment
propertyProperty that is leased to another entity under a finance leaseOwner-
occupied propertyA
building owned by the entity and leased out under one or more operating leases
5. The Macar Company uses a periodic inventory accounting system and values
its inventory by using the lower of cost and NRV rule. The allowance method is
used in applying the lower of cost and NRV rule. The company adjusts and closes
its books annually on December 31. Below are the cost and market values of the
company’s year-end inventories for a three-year period:

Date Cost Market

December 31, 2014 P700, 000 P700, 000

December 31, 2015 560, 000 460, 000

December 31, 2016 640, 000 580, 000

Which of the following journal entries would be correct as of December 31, 2016,
to apply the lower of cost and NRV?
DR: Allowance to Reduce Inventory to market P40,000
CR: Loss recovery due to market valuation P40,000
DR: Allowance to Reduce Inventory to Market P60,000

CR: Allowance to Reduce Inventory to market P60,000

DR: Inventory P580, 000; CR: Income Summary P580,000DR: Loss due to Market
Valuation P60,000;

CR: Allowance to Reduce Inventory to market P60,00

6. Urdaneta Company reported the following capital structure at year-end.

2018 2019

Ordinary shares 500,000 500,000

Convertible preference shares 100,000 100,000

10% convertible bonds payable P3,000,000 P3,000,000

During 2019, the entity paid the annual dividend of P5 per share on the
preference share. The preference shares are convertible into 200,000 ordinary
shares and the 10% bonds are convertible into 100,000 ordinary shares. Net
income for 2019 was P5,000,000. The tax rate is 30%. What amount should be
reported as diluted earnings per share?
9.00
6.51
7.85
6.25
Question 7
Shown below is the bank reconciliation for Agdao Company for June 2013:

Balance per bank, June 30, 2013 P3,000,000

Deposit in transit 480,000

 Outstanding checks ( 560,000)

Bank credit record in error ( 200,000)

Cash balance per book, June 30, 2013 P2,720,000

The bank statement for July 2013 contains the following data:

Total deposits P 2,200,000

Total charges, including an NSF of P160,000 and

service charge of P8,000 1,920,000

All outstanding checks and deposit in transit on June 30, including the bank
credit, were cleared in the bank during the month of July. There were outstanding
checks of P600,000 and deposits in transit of P760,000 on July 31, 2013.

What is cash balance per book as of July 31, 2013?

P3,280,000
P3,608,000
P3,440,000
P3,000,000

Glue Company incurred the following costs during the current year:

Modification to the formulation of a chemical product 1, 350, 000

Trouble-shooting of breakdowns during commercial production 1, 500, 000

Design of tools, jigs, molds and dies involving new technology 1, 700, 000

Seasonal or other periodic design changes to existing products 1, 850, 000

Laboratory research aimed at discovery of new technology 2, 150, 000

In the income statement for the current year, what amount should be reported as
research and development expense?
3,350,000
5,200,000
3,850,000
4,700,000

Villaviciosa Inc.'s fiscal year ended on November 30, 2022. The balance in the
prepaid insurance account as of November 30, 2022, was P36,100 (before
adjustment) and consisted of the following policies:
Date of Date of Balance in
Policy Purchase Expiration Account
A 7/1/2022 6/30/2023 P14,400
B 12/1/2020 11/30/2022 10,500
C 12/1/2021 3/31/2023 11,200
P36,100

The adjusting entry required on November 30, 2022, would include a debit to
Insurance Expense of
P11,200
P 9,600
P24,900
P24,000
On January 1, 2019, Libunao Company had 300,000 ordinary shares outstanding,
P100 par or a total par value of P30,000,000. During 2019, the entity issued
rights to acquire one ordinary share at P100 in the ratio of one share for every 5
shares held. The rights are exercised on March 31, 2019. The market value of
each ordinary share immediately prior to March 31, 2019 was P160. The net
income for 2019 was P6,000,000. What amount should be reported as basic
earnings per share?
16.67
18.75
17.39
17.14

On January 1, 2019, Tommy Company purchased 12% bonds with face value of
P5,000,000 for P5,380,000. The bonds provide an effective yield of 10%. The
bonds are dated January 1, 2019, mature on January 1, 2024 and pay interest
annually on December 31 of each year. The bonds are quoted at 120 on
December 31, 2019. The entity has elected the fair value option for bond
investment. What total income should be reported for 2019?
600,000
1,120,000
1,138,000
1,220,000
12. The following items were included in Opal Company’s inventory account at
December 31, 2004:

Merchandise out on consignment, at sales price, including 40% markup P28,000

on selling price

Goods purchased in transit, FOB shipping point 24,000

Goods held on consignment by Opal Company 16,000

Goods out on approval (sales price, P10,000; cost , P8,000) 10,000

By what amount should the inventory at December 31, 2004 be reduced?

P78,000P29,200P54,000P50,000
When developing requirements for IFRS Standards, can the International
Accounting Standards Board depart from the Conceptual Framework?
Answer not given
No
Yes, but only from aspects of the Conceptual Framework and only if doing so is
needed to meet the objective of financial reporting
Yes, the Board is not required to use the Conceptual Framework when developing
Standards
The cash and cash equivalent account of Meijie as of December 31, 2014 consist
of the following:
Current account at Pig-E Bank P(30,000)
Current account at PHIL Bank 135,000
Treasury Bills (acquired 3 months before maturity) 300,000
Treasury bonds (maturity date is December 31, 2015) 1,500,000
Payroll account 390,000
Foreign bank account – restricted (translated using
 the December 31, 2013 exchange rate) 1,000,000
Postage stamps 1,500
Employees postdated check 5,000
IOU from the vice president 3,000
Credit memo from a supplier for a purchase return 10,000
Traveler’s check 21,000
Money order 12,900
Petty cash fund (consist of P3,000 in currency and PCV for expense
receipts for 12,000) 15,000

What amount would be reported as “Cash and Cash Equivalents on the

statement of financial position on the December 31, 2014?
P1,861,900P2,361,900P863,400P861,900
Wacko Company provided the following data on December 31, 2013:
Cash in bank, net of bank overdraft of P500,000 5,000,000
Petty cash (unreplenished petty cash expenses, P10,000) 50,000
Trade notes receivable, including discounted note of 4,000,000
P1,000,000 accounted for as a conditional sale
Accounts receivable, net of accounts with credit balances of 6,000,000
P1,500,000
Inventory 3,000,000
Bond sinking fund 2,000,000
Deferred charges 250,000
Accounts payable, net of accounts with debit balances of 7,000,000
P1,000,000
Trade notes payable 4,000,000
Bonds payable due on June 30, 2014 2,000,000
Accrued expenses 500,000

What amount should be reported as total current assets on December 31, 2013?
20,040,000
22,290,000
22,040,000
20,050,000
n January 1, 2017, Icar Company issued convertible bonds with a face value of
P5,000,000 for P6,000,000. The bonds are convertible into 50,000 shares with
P100 par value. the bonds have a 5-year life with 10% stated interest rate
payable annually every December 31. The fair value of the convertible bonds
without conversion option is computed at P5,399,300 n January 1, 2017. On
December 31, 2019, the convertible bonds were not fully converted but fully paid
for P5,550,000. On such date, the fair value of the bonds without conversion
privilege is P5,400,000 and the carrying amount is P5,178,300. What is the loss
on the extinguishment of the convertible bonds on December 31, 2019?
221,700
150,000
0
371,700
Which of the following is not true in relation to bearer plant?
The bearer plant and the related agricultural produce are accounted as two
separate assets
It is a living plant that has a remote likelihood of being sold as agricultural
produce, except for incidental scrap sales
Plants which have a dual use or exclusive to be harvested as agricultural produce
is not a bearer plant
Bearer plant should be measured initially at fair value less estimated cost of
disposal
Guava enters into the lease of a piece of machinery for P1,000 per annum for 5
years on July 1, 2022. Guava is granted a rent-free period in the first year and
elects to apply the low-value exemption in IFRS 16 Leases. Calculate the annual
lease rental expense to be recognized through profit or loss for the year ended
December 31, 2022.
Nil
800
500
400
Sur Company has estimated that total depreciation expense for the year ending
December 31, 2009 will amount to P2,000,000, and the 2009 year-end bonuses
to employees will total P4,000,000. Sur paid P500,000 property taxes assessed
for the year 2009. On June 30, 2009, Sur incurred a permanent inventory loss
from market decline of P800,000 and loss on sale of land of P200,000. In the
interim income statement for the six months ended June 30, 2009, what total
amount of expenses relating to these items should be reported?
P3,850,000P4,250,000P3,750,000P3,450,000
Lady Company had the following account balances on December 31,2012:
Cash in bank 3,200,000
Cash on hand 250,000
Cash fund (set aside for dividend payments) 100,000
Cash fund (set aside for acquiring land in 2013) 1,700,000

The cash in bank includes a P250,000 compensating balance against short-term

borrowing and is not legally restricted as to withdrawal by Lady. What amount
should be reported as cash under current assets on December 31, 2012?
5,350,000
3,450,000
5,250,000
3,550,000
The analysis of shareholder’s equity of P Company at January 1, 2014 showed
the following:

Ordinary share, par value P20, authorized 200,000 shares, issued

and outstanding, 120,000 shares P2,400,000

Share Premium 480,000

Accumulated profits and losses 540,000

The company uses the cost method of accounting for treasury share and the
following transactions took place; Acquired 2,000 shares of its share for P70,000.
Sold 1,200 treasury shares at P40 per share. Retired the remaining treasury
shares, what is the amount of the Share Premium at the end of the accounting
period?
P474,000P480,000P476,800P462,000

B-Meg Company, a public limited company, has granted share options to its
employees with a fair value of P12,000,000. The options vest in three years’
time. The company uses the Monte-Carlo model to estimate the fair value of the
options, the number that will vest and the revision of estimates such as the
following:

o Grant date – January 1, 2013, estimate of employees leaving the company

during the vesting period – 5%.
o Revision of estimate – January 1, 2014, estimate of employees leaving the
company during the vesting period – 6%.
o Actual number of employees leaving the company – December 31, 2015 – 5%

What would be the amount of expense charged in the profit or loss for the year
ended December 31, 2015?
P3,760,000P3,800,000P3,880,000P4,000,000
On January 1, 20Y1, SME acquired a trademark of a line herbal products for
P450,000. The SME expects to continue marketing the products using the
trademark indefinitely. An analysis provides evidence that the line of trademark
products may generate net cash inflows for an indefinite period. An estimate of
the useful life of the trademark is not possible. A competitor developed a
technological breakthrough in 20Y4 expected to result in a product that will
reverse the demand for SME’s patented product line. At December 31, 20Y4, the
recoverable amount of the trademark was P80,000. It is expected that the
demand for SME’s product line will remain until December 31, 20Y6, when the
competitor launches the new product. The SME intended to continue
manufacturing the patented products until December 31, 20Y6. What amount
should be recorded as amortization of trademark for 20Y1 and 20Y4,
respectively?
105,000 and 45
,000
45,000 and 105,000
45,000 and 31,500
150,000 and 0
On January 2, 2015, Santos Corporation acquired a track of land that is to be sold
in the ordinary conduct of business. The purchase price of the property of
P50,000,000 was paid in cash and a total transaction costs of P500,000 related
to the acquisition of the property was also paid at a later date. The land was
subdivided into 2,000 lots (200 square meters for every lot) for an additional
costs of P5,500,000. On December 31, 2015, the market value of the lot was
P1,500 per square meter.

As of December 31, 2016, only 20,000 square meters are still unsold and market
value of the lot had increased to P1,600 per square meter. On this date, Santos
Corporation decided to transfer the remaining lots into investment property that
is to be carried under the fair value models. There was no additional cost
incurred on the change of intention on the property. What amount of gain should
Santos Corporation recognize as a result of the transfer?
29,475,00029,500,00029,225,00029,200,000
Which is not exempted from the mandatory adoption of PFRS for SMEs?
An SME that is a subsidiary of a parent reporting under full PFRS
An SME that projects that it will breach the quantitative thresholds and the
breach is continuing and significant
An SME with a subsidiary that is mandated to report under full PFRS
An SME with concrete plans to conduct an initial public offering within the next 3
years
Parker Company is experiencing financial difficulty and is negotiating debt
restructuring with its creditor to relieve its financial stress. Parker has a
P2,500,000 note payable to Philippine National Bank. The bank accepted an
equity interest in Parker Company in the form of 200,000 ordinary shares quoted
at P12 per share. The par value is P10 per share. The fair value of the note
payable on the date of restructuring is P220,000

What amount should be recognized as gain from debt extinguishment as a result

of the “equity swap” and share premium from the issuance of the shares?
(Gain from extinguishment, Share premium)
500,000, 100,000
100,000, 400,000
400,000, 500,000
200,000, 200,000
The EAT Company granted 100 share options to each of its 500 employees on
January 1, 20Y1. The option plan allows the employees to purchase a share of
the entity’s P100 par value ordinary share at P120 per share. On January 1, 20Y1,
the fair value of each option is P30. The option plan requires the employees
receiving the options to be in the service of the company for the next three
years. Options are exercisable starting January 1, 20Y4 and options expire at the
end of 20Y5. At January 1, 20Y1, it was estimated that 20% of the employees will
leave during the next three years.

Actual and revised estimate of employees leaving the company during 20Y1,
20Y2 and 20Y3 are as follows:
20Y1: 20 employees left; revised estimate is 15% of remaining options
20Y2: 10 employees left; revised estimate is 10% of remaining options
20Y3: 18 employees left

How much is the compensation expense for the year 20Y3?

438,000510,0001,356,000846,000
Presented below is information related to Russell, Incorporated:
Inventory January 1, 2016: Cost, P250,000 (P390,000 retail) ; Purchases,
P950,500 (P1,460,000 retail); Purchase returns, P60,000 (P80,000 retail);
Purchase discounts, P18,000; Gross sales after employee discounts, P1,260,000;
Sales returns, P97,500; net mark-up, P80,000; Net mark-down, P25,000; Freight-
in, P80,000; Employee discount, P8,000 and loss from breakage, P2,500.
Assuming that Russell, Inc. uses the average retail inventory method, how much
would be the cost of its ending inventory at December 31, 2016?
P410,760P429,603P432,798P423,800
In explaining the meaning of the term a “obligation” in the definition of a liability,
the Conceptual Framework states:
That an obligation is a duty or responsibility that an entity has no practical ability
to avoid
That an obligation can arise from an entity’s customary practices, published
policies or specific statements, if the entity has no practical ability to avoid those
practices, policies or statements
That an obligation can arise from a duty or responsibility conditional on a future
action that the entity itself may take, if the entity has no practical ability to avoid
taking that action
All of the above
None of the above
Step Company reported the following information relating to liabilities on
December 31, 2019:
· Accounts payable for goods and services purchased on open account
amounted to P600,000 and accrued expenses totaled P500,000 on December 31,
2019.
· On July 1, 2019, the entity issued P5,000,000, 8% bonds for P4,400,000 to
yield 10%. The bonds mature on June 30, 2024, and pay interest annually every
June 30. On December 31, 2019, the bond were trading in the open market at 86
to yield 12%. The effective interest method is used to amortize bond discount.
· The pretax financial income for 2019 was P10,500,000 and the taxable
income was P9,000,000. The difference is due to P1,000,000 permanent
difference and P500,000 temporary difference which is expected to reverse in
2020. The entity is subject to the income tax rate of 30% and made estimated
income tax payments during the year of P1,000,000.

What amount of current liabilities should be reported on December 31, 2019

4,000,000
3,150,000
2,800,000
3,000,000
Manggahan Company’s shareholders’ equity at December 31, 2019 consisted of
the following:

8% cumulative preference share, P50 par, liquidating value, P55

per share; issued and outstanding, 20,000 shares P1,000,000

Ordinary share, P25 par, 100,000 shares issued and outstanding 2,500,000

Accumulated profits 400,000

Dividends on preference share have been paid through 2018 but have not been
declared for 2019. At December 31, 2019, how much is the book value per
ordinary share of Manggahan Company?
P27.20
P29.00
P28.20
P25.00
In the 2017 financial statements, Cris Company reported interest expense of P85,
000 in the income statement and cash paid for interest of P68, 000 in the
statement of cash flows. There was no prepaid interest or interest capitalization
either at the beginning or end of 2017.Accrued interest on December 31, 2016
was P15,000. What amount should be reported as accrued interest payable on
December 31, 2017?
32,000
2,000
15,000
17,000
Quezon Company sold goods to wholesalers on terms of 5/15. Net 30. The entity
has no cash sales but 50% of customers take advantage of the discounts based
on experience. The entity used the gross method of recording sales. An analysis
of accounts receivable on December 31, 2013 revealed the following:

Age Amount Collectible

0-15 days 5, 000, 000 100%

16-30 days 2, 000, 000 90%

Over 30 days 1, 000, 000 700, 000

What amount should be reported as net realizable value of accounts receivable?
7, 500, 000
7, 375, 000
7, 875, 000
8, 000, 000
Which of the following should be amortized over the periods of estimated
benefit?
Patent registration cost for a successfully developed product for commercial
sale
Legal cost in successful defense of a patent infringement suit.
Goodwill arising from the purchase of an existing business
Costs incurred in organizing a corporation
On September 30, 2015, Bossing Company acquired a smelting machine for
P270,000 paying a down payment of P90,000 and the balance to be paid in two
equal annual installments on September 30, 2016 and September 30, 2017.
There was no stated interest provided in the note, however, an 8% interest rate
is considered to be appropriate for a note of this type. The PVF for an ordinary
annuity of P1 @ 8% for 2 periods is 1.78. Additional costs for freight P5,000;
installation and testing for P10,000. Bossing Company uses the straight-line
method of depreciation. The smelting machine’s expected useful life is 5 years
with a salvage value of P20,000. The depreciation expense included in Bossing
Company’s 2015 income statement is
53,04049,04012,26013,260

For information to be relevant, it has to possess:

Either predictive or confirmatory value, or both
Only predictive value
Only confirmative value
Both predictive and confirn January, 2019, DNL Corporation purchased a mineral
mine for 3,400,000 with removable ore estimated by geological surveys at
2,000,000 tons. The property has an estimated value of 200,000 after the ore
has been extracted. The company incurred 1,000,000 of development costs
preparing the mine for production. During 2019, 500,000 tons were removed and
400,000 tons were sold. What is the amount of depletion that DNL
should expense for 2019?
800,000
640,000
1,120,000
840,000
Certs Company acquired property in 2019 which contains mineral deposit. The
acquisition cost of the property was P20,000,000. Geological estimates indicate
that 5,000,000 tons of mineral may be extracted. It is further estimated that the
property can be sold for P5,000,000 following mineral extraction. For
P2,000,000, Certs is legally required to restore the land to a condition
appropriate for resale. After acquisition, the following costs were incurred:

Exploration cost 13,000,000

Development cost related to drilling of wells 10,000,000

Development cost related to production equipment 15,000,000

The company extracted 600,000 tons of the mineral in 2019 and sold 450,000
tons. In the 2019 income statement, what amount of depletion is included in
cost of sales?
4,800,000
4,050,000
3,600,000
5,400,000
Under PAS 10, which of the following is classified as an adjusting event rather
than a non – adjusting event?
A mistake was discovered in the calculation of the allowance for uncollectable
trade receivables resulting to an understatement of the trade receivables.
The entity announced the discontinuance of its assembly operation.
The entity entered into an agreement to purchase the freehold of its currently
leased office building.
Destruction of a major production plant by fire.
Pokemon Company purchased 1,000 llamas on January 1, 2016 for P4,500,000.
These llamas will be sheared and their wool sold to specialty clothing
manufacturers. During 2016, the change in fair value due to growth and price
change is P500,000. The wool harvested but not yet sold is valued at net
realizable value of P400,000. The decrease in fair value of biological assets due
to harvest is P50,000. What is the gain on biological assets for 2016?
850,000500,000900,000450,000
On December 1, 2016, Andrew Company committed to a plan to dispose of a
business component's assets. The disposal meets the requirements to be
classified as discontinued operations. On that date, the entity estimated that the
loss from the disposition of the assets would be P700, 000 and the component's
operating loss was P200, 000. Disregarding income tax, what amount of loss
should be reported for discontinued operation for 2016?
0
200,000
900,000
700,000The December 31, 2008 balance sheet of Camille Corp. showed
shareholders’ equity of P448,700. Transactions during 2008 which affected the
shareholders’ equity were: (1) an adjustment to Retained Earnings for an
overstatement of depreciation in 2007 P10,000; (2) gain on the sale of treasury
shares, P9,000; (3) declared dividends of P60,000 of which P40,000 were paid
during the year; and (4) net income after tax of P75,500. The share capital
balance of P300,000 remain unchanged during the year.

The retained earnings balance on January 1, 2008 was

P114,200P134,200P132,300P123,200
Tabloid. Company negotiated with a major creditor to restructure a maturing debt
on December 31, 2016. The creditor was owed a principal of P10, 000,000 and
interest of P1, 200,000 but agreed to accept equipment with fair value of P8,
000,000 and note receivable from Tabloid Company's customer with a face value
of P2, 000,000. The equipment had a carrying amount of P5, 000,000.
What amount should be recognized as gain from extinguishment of debt on
December 31, 2016?
2,000,0004,200,0001,200,0000
If an entity has a legal ownership of a physical object, its asset is:
The set of rights arising from legal ownership of the physical object
The physical object
All of the above
None of the above
The economic benefits that may flow from the physical object

Sony Company purchased machinery for 160,000 on January 1, 2015. Straight-

line depreciation has been recorded based on a 10,000 salvage value and a 5-
year useful life. The machinery was sold on May 1, 2019 at a gain of 3,000. How
much cash did Sony receive from the sale of the machinery?
23,000
43,000
27,000
33,000
Investor company acquired a 40% interest in an associate for P3,000,000. The
investor is part of a consolidated group. In the financial period immediately
following the date on which it became an associate, the investee took the
following action:
· revalued assets up to fair value by P500,000
· generated profits of P1,600,000
· declared a dividend of P300,000

The balance in the investor’s account of ‘Shares in associate’, after equity

accounting has been applied, is:
P3,960,000
P3,840,000
P3,720,000
P3,000,000
Contingent assets need not be disclosed when considered
possible.
likely.
virtually certain.
Probable
Sunny Company began business in October of 2014. During the year, Sunny
purchased the three equity securities listed below. In its December 31, 2014
balance sheet, Sunny appropriately reported a P50,000 credit balance in its “Fair
Value Adjustment” account. There was no change during 2015 in the composition
of Sunny’s portfolio of investment in equity security securities. Pertinent data are
as follows:

Security Cost December 31, 2015 Market

Value

M P400,000 P600,000

B 500,000 700,000

A 900,000 800,000

P1,800,000 P2,100,000
What amount of unrealized gain on these securities should be included in
Sunny’s profit or loss for the year ended December 31, 2015?
P250,000P350,000P300,000None
Pacific Company acquired two items of machinery as follows:
a. On December 31, 2015, Pacific Company purchased a machine in
exchange for a noninterest bearing note requiring ten payments of P500,000.
The first payment was made on December 31, 2016, and the others are due
annually on December 31. The prevailing rate of interest for this type of note at
date of issuance was 12%.
The present value of an ordinary annuity of 1 at 12% is 5.33 for nine periods and
5.65 for ten periods.
b. On December 31, 2015, Pacific Company acquired used machinery by
issuing the seller a two-year, non-interest-bearing note for P3,000,000. In recent
borrowing, Pacific Company has paid a 12% interest for this type of note.
The present value of P1 at 12% for 2 years is .80 and the present value of an
ordinary annuity of 1 at 12% for 2 years is 1.69.
The total cost of the machinery
5,065,0005,565,0008,235,0005,225,000
Rice Company, an investment entity, provided the following income and
expenses for the current year:
Dividend income from 9,200,0 Write-down of securities and 150,000
investments 00 derivatives held for trading
Distribution income from trusts 500,000 Other income 250,000
Interest income on deposits 700,000 Finance cost 300,000
Income from bank treasury bills 100,000 Administrative staff costs 3,800,000
Unrealized gain on derivative 400,000 Sundry administrative costs 1,200,000
contracts
Income from dealing in 600,000 Income tax expense 1,700,000
securities and derivatives held
for trading.

What is the comprehensive income for the current year?

3,800,000
4,200,000
9,200,000
4,600,000
Hunger Games Company provided you the following:

Unit External Internal Total Profit (Loss) Assets

Luxury 180 20 200 32 194

Mining 110 15 125 (4) 24

Explosives 120 130 250 192 192

Seafood 60 5 65 116 116

Total 470 170 640 336 526

The number of reportable segments

2
3
4
1
Jeric ·company purchased machinery on January 1, 2016 for P6, 300,000. The
entity used the sum of years' digits method with no residual value to depreciate
the asset for the first two years of the estimated six-year life. In 2018, the entity
changed to the straight-line depreciation method. The depreciation recorded
under sum of years' digits method totaled P1, 800,000 for 2016 and Pl, 500,000
for 2017. The depreciation under straight-line method would have been P1,
050,000 each for 2016 and 2017. The tax rate is.30%. What is the cumulative
effect of this change as an adjustment of retained earnings on January 1,
2018?
1,200,000
0
1,350,000
840,000
All of the following are classified as Investment Property except
Property being constructed or developed on behalf of third parties
A building owned by the entity (or held by the entity under a finance lease) and
leased out under one or more operating leases
A building that is vacant but is held to be leased out under one or more
operating leases
Land held for long term capital appreciation rather than for short-term sale in the
ordinary course of business
On December 31, 2016, Marianne Company received two P2, 000,000 notes
receivable from customers. On both notes, interest is calculated on the
outstanding principal balance at the annual rate of 3% and payable at maturity.
The first note, made under customary trade terms, is due in nine months and the
second note is due in five years. The market interest rate for similar notes on
December 31, 2016 was 8%. The PV of 1 at 8% due in nine months is 9.944, and
the PV of 1 at 8% due in 5 years is 0.68. On December 31, 2016, what total
carrying amount should be reported for the two notes receivable?
3,564,0003,494,4003,248,0003,360,000

The following facts relate to Syde Company for the year 2014:

Deferred tax liability, January 1, 2014 P400,000

Deferred tax asset, January 1, 2014 0

Taxable income for 2014 1,600,000

Pretax financial income 1,750,000

Cumulative temporary difference at 12/31/14 giving rise to 2,400,000

future taxable amount

Cumulative temporary difference at 12/31/14 giving rise to 350,000

future deductible amount

Income tax rate for all years 0

What is the amount deferred tax expense (net) for 2014?

P400,000P112,000P368,000P256,000

It is the smallest identifiable group of assets that generate cash inflows from
continuing use that are largely independent of the cash inflows from other assets
or group of assets.
Cash generating unit
Goodwill
Corporate asset
The enterprise as a whole
Under PAS 37, a "provision" is recognized
when there is a legal obligation arising from a past event, the probability of the
outflow of resources is less than probably, and a reliable estimate can be made.
when there is a possible obligation arising from past event.
when there is a constructive obligation as a result of a past event, the outflow of
resources is probably, and a reliable estimate can be made of the amount of the
obligation.
when management decides that it is essential that a provision be made.

Rapp Company leased a new machine to a lessee on January 1, 2016. The lease
is an operating lease and expires on January 1, 2021. The annual rental is P90,
000. Additionally, on January 1, 2016, the lessee paid P50, 000 to the lessor as a
lease bonus and P25, 000 as a security deposit to be refunded upon expiration of
the lease. What amount of rental revenue should be recognized for 2016?
90,000125,000100,000140,000
On December 31, 2016, Veronica Company reported fair value of plan assets P9,
000,000 and project benefit obligation P9, 400,000. On December 31, 2017, the
entity reported fair value of plan assets P9, 900,000 and projected benefit
obligation P11, 100,000. During 2017, contribution was P1, 260,000 and benefits
paid were P1, 125,000. The discount rate for 2016 and 2017 were 10% and 9%,
respectively. What is the remeasurement gain or loss attributable to plan assets
for 2017?
45,000 loss.135,000 gain.45,000 gain.135,000 loss.

A right-of-use asset acquired under a lease is measured at which amount

according to IFRS 16 Leases?
Lease liability + initial direct costs + estimated costs of dismantling + incentives
received
Lease liability - initial direct costs - estimated costs of dismantling + incentives
received
Lease liability + initial direct costs + estimated costs of dismantling - incentives
received
Lease liability - initial direct costs + estimated costs of dismantling - incentives
received

On July 1, 2016, Tommy, Inc, paid P1,000,000 for 100,000 ordinary shares (40%)
of Maricar Corporation. At that date the net assets of Maricar totaled P2,500,000
and the fair values of all of Maricar's identifiable assets and liabilities were equal
to their book values. Maricar reported net income of P500,000 for the year
ended December 31, 2016, of which P300,000 was for the six months ended
December 31, 2016. Maricar paid cash dividends of P250,000 on September 30,
2016. Tommy does not elect the fair value option for reporting its investment in
Maricar. In its income statement for the year ended December 31, 2016, what
amount of income should Tommy report from its investments in Maricar?
P100,000
P200,000
P 80,000
P120,000
Which of these entities qualifies as an SME?
A listed entity with total assets of P250,000,000
A public utility company
A private entity that holds assets in a fiduciary capacity as its secondary
business
A cooperative with total liabilities lower than P3,000,000

Green Company acquired a building on January 1, 2015 at a cost of

P50,000,000. The building has an estimated life of 10 years and residual value
of P5,000,000. The building was revalued on January 1, 2019 and the revaluation
revealed replacement cost of P80,000,000, residual value of P2,000,000 and
revised life of 12 years. What is the revaluation surplus on December 31, 2019?
30,000,000
16,800,000
14,700,000
26,250,000

Which statement is incorrect concerning the recognition and measurement of an

impairment loss?
After the recognition of an impairment loss, depreciation charge for the future
periods should be adjusted to allocate the revised carrying amount, less its
residual value, on a systematic basis over its original useful life.
If the recoverable amount of an asset is less than its carrying amount, the
carrying amount of the asset should be reduced to its recoverable amount.
Impairment loss is the amount by which the carrying amount of an asset exceeds
its recoverable amount
An impairment loss should be recognized as expense in the income statement
immediately.
All of the following are true with regard to impairment of long-lived assets,
except
If the recoverable amount is lower than the carrying amount, an impairment loss
is recognized
If impairment indicators are present, the company must conduct an impairment
test
If either the fair value less cost of disposal or the value-in-use is higher than the
carrying amount, no impairment loss is recognized
The impairment test compares the asset's carrying amount with the lower of fair
value less cost of disposal and value-in-use

On January 2, 2019, Power Company, a medium size entity, purchased 20% of

Plant Corporation’s 200,000 ordinary shares for P3,000,000 including a P50,000
transaction cost. This investment gives Power the ability to exercise significant
influence over Plant Corporation. During 2019, plant reported net income of
P1,750,000 and paid cash dividends of P1,000,000 on its ordinary shares. As of
December 31, 2019, the shares of Plant Corporation are traded and are currently
selling at p 81.25 per share. What amount of unrealized gain or loss should
Power Company recognize in its December 31, 2019 statement of comprehensive
income?
None
P350,000
P250,000
P300,000
On December 31, 2011, Conjuring Company committed to a plan to sell a
manufacturing facility in its present condition and classifies the facility as held
for sale at this date. After a firm purchase commitment is obtained, the buyer’s
inspection of the facility identifies environmental damage not previously known
to exist. Conjuring Company is required by the buyer to make good the damage,
which will extend the period required to complete the sale beyond one year.
However, the entity has initiated actions to make good the damage, and
satisfactory rectification of the damage is highly probable. On December 31,
2011, the carrying value of the facility is P4,000,000 and its fair market value is
P3,600,000. In its December 31, 2011 statement of financial position, Conjuring
Company should report this facility as:
Should be reported separately as non-current asset held for sale and valued at
P3,600,000
Should no longer be included in the December 31, 2011 balance sheet.
Should be included among the property, plant and equipment at P4,000,000
Should be included among the property, plant and equipment at P3,600,000
An entity provided the following information for the current year:
Income from continuing operations 400,000
Income from discontinued operation 130,000
Unrealized loss on financial asset - FVPL 80,000
Unrealized gain on equity investment – FVOCI 100,000
Unrealized gain on debt investment - FVOCI 120,000
Unrealized gain on futures contract designated as cash flow hedge 40,000
Translation loss on foreign operation 20,000
Net remeasurement gain on defined benefit plan during the year 60,000
Loss on credit risk of a financial liability designated as FVPL 30,000
Revaluation surplus during the year 250,000

What amount should be reported as net income for the current year?
400,000
480,000
530,000
450,000

McGrady Company reports pretax financial income of P700,000 for 2014. The
following caused taxable income to be different than financial income:
o Depreciation on the tax return is greater than depreciation on the income
statement by P160,000.
o Rent collected on the tax return is greater than rent earned on the income
statement by P220,000.
o Fines for pollution appears as an expense of P110,000 on the income
statement.

McGrady’s tax rate is 32% for all years and the company expects to report
taxable income in all future years. There are no deferred taxes at the beginning
of 2014.

What is the amount of income tax liability for 2014?

P224,000P259,200P278,400P329,600
On July 1, 2006, Minalin Corp. purchased computer equipment at a cost of
P360,000. This equipment was estimated to have a 6-year life with no residual
value and was depreciation by the straight-line method. On January 3, 2009,
Minalin determined that this equipment could no longer process data efficiently,
its value had been permanently impaired, and P70,000 could be recovered over
the remaining useful life of the equipment. What carrying amount should Minalin
report on its December 31, 2009 balance sheet for this equipment?
P 0P150,000P50,000P 70,000